Rick Jones, Director of Planning -- "For Information Only"
Agenda Item #
Columbus Consolidated Government
Council Meeting
12/10/2013
Agenda Report #
TO: Mayor and Council
SUBJECT: Enterprise Zone ? McDonald?s Company
INITIATED BY: Planning Department
Recommendation: Adopt the resolution for McDonald?s Company, which would
allow them to receive ad valorem tax abatements (with the exclusion of school
and general obligation debt levies) as specified under the Enterprise Zone
Employment Act.
Background: McDonald?s Company, located at 3450 Victory Drive (previous
address of record, prior to March 2013 was 3448 Victory Drive) exists within
the boundaries of the Columbus Business Development Center (Enterprise Zone).
The applicant is requesting to receive tax abatements on all ad valorem taxes
(with the exclusion of school and general obligation debt levies) for a stated
$1,200,000.00 additional investment in land, buildings, machinery and
equipment.
Analysis: McDonald?s Company, states that they will hire employees and
maintain at least five new jobs, (estimated total of 50) as required by the
Enterprise Zone Employment Act, prior to the tax abatement period. They plan to
maintain 50 jobs overall, with hiring to be based on qualifications and a
target of approximately 90% of those hired being qualified as low to moderate
income residents.
It should be noted here that this development has already been constructed and
has opened to the public. The new restaurant was primarily built on the
existing site after the former building was demolished. The intent of the
Enterprise Zone has been to encourage the expansion or development of new jobs
in this area. Technically the application meets all of the requirements of
this ordinance. However, this is the first request for a retail (restaurant)
establishment that has already been constructed and is actually operational.
There is nothing in the ordinance that speaks to this condition, and requires a
policy decision from Council to determine whether such a tax exemption should
be granted.
Financial Considerations: Tax abatements under the State of Georgia Enterprise
Zone Act may be made available to this project. Ad valorem taxes will be abated
based upon the following schedule:
One hundred percent (100%) of the property taxes shall be exempt for the first
five years; and,
Eighty percent (80%) of the property taxes shall be exempt for the next two
years; and,
Sixty percent (60%) of the property taxes shall be exempt for the next year;
and,
Forty percent (40%) of the property taxes shall be exempt for the next year;
and
Twenty percent (20%) of the property taxes shall be exempt for the last year.
The Tax Commissioner with the Board of Tax Assessors will provide the estimate
of taxes abated for the ten-year period beginning with Tax Year 2014.
Projected Annual Fiscal Impact Statement: At a stated value of $1,200.000.00
investment in real property, (land $200,000.00, buildings $700,000.00 and
equipment $300,000.00) the 10-year abatement would be based on an annual
valuation of the asset, the type of asset (percentages set by the state) and
the annual mileage rate.
Without the additional $1,200.000.00 investment proposed by the applicant, the
annual tax revenue, (net to the city after school, state and bond mils are
subtracted) would be $8,864.92 per year. Over ten years, (with no new
investment - at it's current valuation and millage rate) the property would
generate approximately $88,649.92. Over ten years, using the applicant?s
stated additional investment and making assumptions of continuity in land value
(and not considering depreciation of personal property), the property could
generate $113,454.00
Legal Considerations: The Board of Tax Assessors also requires to be notified
of the status of the project as of January 1 of each year in order to grant the
abatement. This information enables the Board to value the property at the
stage of completion as of the January 1 valuation date asset by Georgia code.
The Board would need to know when the project is considered completed. The only
personal property types, which have been approved for recognition within the
Enterprise Zone, are machinery and equipment that is permanently located within
the EZ.
Recommendations/ Actions: Adopt the resolution for McDonald?s Company, which
would allow them to receive ad valorem tax abatements (with the exclusion of
school and general obligation debt levies) as specified under the Enterprise
Zone Employment Act.
Attachments